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ML BeneBits

Earlier this week, the IRS published Internal Revenue Bulletin 2018-1, which modified the IRS Voluntary Correction Program (VCP) User Fee Schedule, effective January 2, 2018. The updated fee schedule bases user fees on the amount of plan assets (previously, user fees were based on the number of plan participants) and, in some cases, significantly lowers the user fee amount. The updated fee schedule provides as follows:

  1. $1,500 for plans with assets of $500,000 or less.
  2. $3,000 for plans with assets greater than $500,000 and up to $10,000,000.
  3. $3,500 for plans with assets greater than $10,000,000.

This updated fee schedule will significantly reduce the user fee for many VCP applicants (the maximum user fee under the previous schedule was $15,000). However, for those applicants seeking to correct certain common failures, the price could go up because the updated fee schedule eliminates the reduced or alternative user fees that were available when using the simplified VCP schedules to correct these errors (e.g., VCP applications covering only loan failures, VCP applications covering only required minimum distribution failures). In addition, applicants for small plans may have higher fees under the new schedule. Finally, please note that the user fee for Group Submissions and the special fee waiver for terminating Orphan Plans remain unchanged.